As a small business, lowering business expenses requires tough decisions and compromises. It isn’t easy to focus on reducing spending while also needing to increase sales. After all, you have to spend money to make money – right?
While this sentiment may be true in certain circumstances, cutting expenses is arguably more important when trying to accomplish profitability as a startup. As challenging as it may be, making these choices does not have to be at the cost of your business plan.
Below, I’ll share six straightforward cost-saving strategies that trim overhead and increase profitability.
Reduce Your Heating and Cooling Expenses
Heating and air conditioning in an office is a non-negotiable expense. Sitting in 85 degree heat for eight hours is not worth saving money on utility bills. However, overuse of heat and AC can drive up costs more than you’d expect. Consider investing in a programmable thermostat for the best of both worlds.
Most business owners use programmable thermostats as a way to reduce their energy use and utility bills. It allows users to customize a heating and cooling schedule specific to their routine. For example, a thermostat can be programmed to increase AC in the morning and turn off completely overnight.
Limit Paper Use
Like reducing heating and cooling costs, limiting paper use and waste is a great way to increase your company’s bottom line. Not to mention it’s great for the environment too. It’s a win win!
If you haven’t already made these transitions, consider cutting down paper waste with the following best practices:
- Set your printer default to print double-sided.
- Widen margins and reduce font on lengthy documents.
- Notify sources of postal mail when employees no longer work for your company.
- Encourage employees to “go paperless” and opt for direct deposit.
Since office expenses such as printer paper and envelopes are often repurchased when supplies are low, many businesses do not track these costs. However, you’d be surprised at how quickly they can add up.
Offer the Option for Remote Work
While startup organizations had started to catch wind of this trend, the COVID-19 pandemic put it into hyperdrive for employers everywhere. For context, as of June 2020, 40% of the United States workforce was working from home full-time. However, one year later, 74% [of businesses](https://www.inc.com/amrita-khalid/businesses-back-office-remote-work.html#:~:text=Nearly 74 percent of businesses,the survey’s findings in March.) plan to bring employees back to the office – but at what cost?
Remote workspaces have extraordinary cost-cutting potential by reducing elements such as:
- Electricity, water, and other utilities.
- Square footage needed to host employees in one central location.
- Office supplies such as paper, toiletries, coffee, and snacks.
- Fees associated with travel, gas, and parking.
- Time lost when commuting to work.
Telecommuting and remote work doesn’t have to be a permanent solution for all team members. However, it is worth polling employees to learn their thoughts on a hybrid work culture.
Hire Freelancers for Non-Core Work
At the start of a business, there is an overwhelming amount of work that needs to be done. From business development tasks, marketing initiatives, and general administrative work, it is almost impossible to accomplish all of it on your own.
As your business grows, so will your team. In the meantime, hire freelancers or independent contractors to lighten your workload. They are cheaper to hire than full-time employees and mitigates a lot of risk for both parties. Additionally, business owners are not expected to provide freelancers with added expenses of medical benefits, paid time off, family leave, and more.
Understand the ROI of Your Marketing Efforts
Today’s small business owner is never short of options when it comes to marketing their products and services. Common advertising strategies include email, pay-per-click, social media, SEO, and blog writing.
If you’re hoping to cut expenses, take a closer look at the ROI of these marketing efforts. Of course, no one will tell you to stop marketing altogether, but better yet, evaluate what avenues generate the most cost-effective leads.
For example, say you are a legal consultant. Your firm spends $1,000 a month on Google Ads. Each month you generate around 50 links clicks, but 0 visitors contact your company for a consultation.
In contrast, an eBook on your website generates at least 5 “Contact Us” form fills each month. By this logic, it makes sense to reduce or stop spending marketing dollars on Google Ads and reinvest that time toward writing more SEO-driven content.
Buy Gently Used Equipment
Printers, phones, monitors, office furniture — the list of necessary equipment goes on and on when starting a business. But remember! Exclusively buying brand new items is not always needed.
Gently used office technology has a long lifespan that also saves business owners a lot of money. In fact, prices for refurbished equipment can be 50%–80% below retail. Making this large of a reduction in expenses can have a major impact on your company’s profitability.